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What is the official definition and core compliance judgment criteria for international entrepot trade goods?
or complex compliance issues.
clearance and fund security.
I am the person in charge of a foreign trade enterprise in Shanghai focusing on home appliance export. Last week, I just learned that the US imposes an additional 25% anti-dumping duty on our main products, which directly swallowed up our already meager profits.
The freight forwarder urgently suggested that we avoid the duty through entrepot trade, but I have never been exposed to such business before, and I can not even figure out what international entrepot trade goods are. Some time ago, I heard from peers that a batch of their goods was detained by customs and stayed at the port for a week because they mistakenly declared transshipment goods as entrepot trade goods, and they lost more than RMB 100,000 only in port detention fees and liquidated damages.
I am very anxious now, afraid that I will make mistakes in the definition and step into pitfalls, not only failing to avoid additional taxes and fees, but also causing huge losses to the company. I want to understand this issue from the perspectives of definition, differentiation standards, compliance requirements and so on.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
First of all，common industry misunderstandings should be exposed: many enterprises confuse international entrepot trade goods with transit goods and transshipment goods，which is the core misunderstanding that most easily triggers risks. Transit goods only pass through the territory during transportation，and their ownership is not transferred，transshipment goods are only reloaded to different transport vehicles midway，and also do not involve ownership change，while the core feature of entrepot trade goods is that the cross-border transfer of ownership is completed in the transit country，which is the most essential difference between the three.
If transit or transshipment goods are mistakenly declared as entrepot trade goods，customs compliance verification will be triggered. In mild cases，goods will be detained at the port，resulting in daily increasing port detention fees and container detention fees. In severe cases，goods will be directly seized by customs，and even affect the enterprise's credit rating in customs，the customs clearance efficiency in the following 3-5 years will be greatly reduced，and the enterprise may also face a fine of up to 10% of the cargo value.
For physical risk isolation measures，it is necessary to select a neutral third-party entrepot port (such as Singapore，Hong Kong，China)，entrust a freight forwarder with entrepot operation qualification to operate the whole process，ensure that goods do not enter the domestic consumer market of the transit country，and sort out exclusive documents for entrepot trade separately to realize physical isolation from ordinary import and export documents.
Exclusive loss stopping tips: conduct pre-declaration compliance review with customs in advance，and check the declaration logic loopholes through the document pre-review service of professional agencies，at the same time，purchase exclusive credit insurance for entrepot trade to cover losses caused by risks such as customs seizure and port detention.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
In the customs declaration link, the core audit points for international entrepot trade goods lie in the matching between ownership transfer vouchers and logistics trajectories. Customs will focus on verifying the goods ownership transfer clauses in the entrepot trade contract, which need to clearly indicate that the ownership is transferred in the transit country, rather than in the country of origin or the country of destination. At the same time, the bill of lading should show the "TO ORDER" negotiable title, and the endorsement record should be consistent with the buyer information in the transit country.
If there is a logical contradiction in the documents, customs will launch the customs valuation dispute process, requiring supplementary materials such as warehouse receipts in the transit country and transaction flow. If the materials can not be supplemented within 7 working days, the goods will be transferred to the anti-smuggling department for verification, leading to the risk of long-term port detention. In addition, it should be noted that the declaration code of entrepot trade goods should be consistent with the declaration codes of the country of origin and the country of destination, so as to avoid classification queries caused by code differences.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
The logistics path design of international entrepot trade goods should give priority to ensuring the safety of cargo rights and operation efficiency. First of all, it is necessary to select a neutral warehouse with entrepot operation qualification, and avoid goods entering the storage area outside the bonded zone of the transit country, so as to prevent being identified as entering the domestic consumer market. Secondly, the transportation link should adopt the segmented bill of lading mode of "first leg - transit - last leg".
The first leg bill of lading shows the route from the country of origin to the transit country, and the last leg bill of lading shows the route from the transit country to the country of destination. Direct bill of lading should not be used throughout the process to avoid exposing the real cargo flow direction. At the same time, it is necessary to confirm the free storage period of the transit country in advance.
Generally, the free storage period in Singapore and Hong Kong, China is 7-14 days. It is necessary to complete the goods reloading and bill of lading transfer within the free storage period to avoid container detention fees. In case of abnormal situations such as container rolling and space shortage, it is necessary to immediately launch the alternative transit port plan, and give priority to alternative ports in the same region to ensure uninterrupted cargo circulation.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
The tax core of international entrepot trade goods is to use the tax policies of the transit country to achieve compliant tax reduction. First of all, it is necessary to confirm whether the transit country implements VAT exemption policy for entrepot trade. For example, Singapore exempts VAT on the sales of goods under entrepot trade, while Hong Kong, China implements the territorial taxation principle, and entrepot trade profits do not need to pay profits tax.
Secondly, it is necessary to avoid triggering BEPS (Base Erosion and Profit Shifting) rules, ensure that the profit level of entrepot trade conforms to the arm's length principle, and avoid being identified as profit shifting by the tax authorities of the country of origin or the country of destination. In addition, cash flow can be optimized through the VAT deferral policy.
When importing in the destination country, apply for VAT deferral, so there is no need to pay import VAT at the time of customs clearance, but declare and pay it uniformly during the declaration period, to ease the capital pressure. It should be noted that all tax planning should retain complete transaction vouchers, including contracts, invoices, logistics documents, etc., for inspection by tax authorities.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
The collection and payment operations of international entrepot trade goods must strictly follow the compliance requirements for cross-border collection and payment. First of all, it is necessary to adopt the mode of "receiving before paying" or "separate management of revenue and expenditure" to avoid compliance risks caused by fund mixing. If RMB settlement is adopted, the fund transfer in the transit country can be completed through the CIPS system to ensure that the capital trajectory is consistent with the cargo flow direction; if foreign currency settlement is adopted, the word "ENTREPORT TRADE" should be marked in the SWIFT message, and the transaction contract number of the transit country should be supplemented.
At the same time, complete entrepot trade documents, including bills of lading, contracts, invoices, warehouse receipts in the transit country, etc., should be retained in the bank for compliance review by the bank. In addition, it is necessary to avoid using offshore accounts for fund transfer without real transaction background, otherwise it will be included in the key monitoring list of the foreign exchange administration, affecting the subsequent cross-border collection and payment authority.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
The core legal risk of international entrepot trade goods lies in the rigor of cargo right transfer and contract clauses. First of all, the entrepot trade contract should clearly mark the "exclusive for entrepot trade" clause, and clearly agree on the specific time and place of transfer of goods ownership in the transit country, so as to avoid disputes caused by vague expressions.
Secondly, the endorsement transfer of the bill of lading must comply with legal provisions. If an order bill of lading is adopted, the seller shall endorse and transfer it to the buyer in the transit country, and then the buyer in the transit country shall endorse and transfer it to the final buyer in the destination country, so as to ensure the logical closed loop of cargo right transfer.
At the same time, the buyer in the transit country can be required to provide a bank letter of indemnity (LOI) to ensure that the buyer can pay the goods payment in time after the transfer of goods ownership, so as to avoid losing both money and goods. In addition, force majeure clauses should be added to clarify the division of responsibilities for force majeure events such as political risks and natural disasters in the transit country, so as to avoid potential legal disputes in advance.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
Preparations should be made in advance for the on-site inspection of international entrepot trade goods in the transit country to avoid the risk of customs seizure. First of all, it is necessary to ensure that the seals of the goods are neutral seals, and avoid displaying the brand logos of the country of origin or the country of destination, so as to prevent being identified by customs as having the intention to enter the domestic consumer market. Secondly, in case of unpacking inspection, prepare documents such as entrepot trade contracts, bills of lading and warehouse receipts in advance to cooperate with the inspection work of customs staff, and avoid extended inspection time due to incomplete documents.
At the same time, it is necessary to keep the packaging of the goods intact, and avoid damage, unsealing and other situations, otherwise customs will suspect that the goods have been replaced or used, leading to further verification. If customs requires sampling and appraisal, it is necessary to entrust an official appraisal agency in the transit country to ensure the compliance of the appraisal report, and avoid long-term detention of goods due to invalid reports.